Offshoring, Outsourcing, IT-BPO Industry in the Philippines

News Articles for Outsourcing Industry

Business Process Outsourcing (IT-BPO) is the fastest growing industry in the Philippines today is boasting a steady growth in annual revenue and covering about 15% of global outsourcing markets. A prime outsourcing destination in Southeast Asia, according to the Business Processing Association of the Philippines' (BPAP) Investor Primer article, in 2012, Philippines BPO employed approximately 638,000 Filipinos and was expected to expand at least 20 percent before year end, with 1.6 million indirect employees across more than 20 BPO sectors.

According to the results of quarterly industry surveys conducted by BPAP and Outsource2Philippines (O2P), over 20 voice and non-voice, complex services sectors comprise the Philippine IT-BPO and global in-house center (GIC) industry. Leading consulting firm, Kittelson & Carpo Consulting is also seeing an increase in newly registered BPOs in the Philippines. The firm is registering as many as 3 per week.

The Philippines' offshoring/outsourcing industry is composed of shared services offices and independent companies (captive). Large multinational companies outsource in-house parts of their operations to the Philippines; international 3rd party providers offer services from the Philippines to foreign multinationals and independent Philippine companies provide services to international clients. Through these options many offshore outsourcing services performed in the Philippines can be offered to companies of all sizes and needs. A wide range of outsourcing segments can already be found in the Philippines' outsourcing industry. The 2 main areas of expertise are Contact Centers and Business Process Outsourcing (BPO). The Philippines formerly ranked second in outsourcing worldwide, just after India. However, recent developments in the global outsourcing industry have propelled the Philippines to the top spot in voice BPO and ranking 2nd in non-voice complex services.

The Philippines ranks Top 3 in location for talent according to analysts, both on graduate level pool and among professionals in BPO sectors such as accounting and finance and other non-voice, complex services and is among the top 3 IT-BPO and GIC locations in the world, after India and China in terms of number of graduates. The Philippines graduates approximately 450,000 tertiary graduates annually.

The outsourcing or IT-BPO industry is considered as one of the fastest growing industries in the world. It has grown at an annual rate of 30 percent over a decade. BPAP stated that the IT-BPO and Global In-house Center (GIC) industry is the Philippines' most important generator jobs. Its contribution to gross domestic product (GDP) is approximately 5% in 2011, and it is the Philippines' third largest net foreign exchange earner after tourism and remittances from an estimated 10 million overseas workers.

The IT-BPO boom in the Philippines is currently led by demand for offshore call or contact centers. In 2006, the Philippines raked in offshore service generating revenues of $2.1 billion, placing third behind India and China. That's up 62% over the $1.3 billion it gained in 2004, and a huge increase from the start of the decade when the outsourcing industry in Manila employed just 2,400 people and the industry had revenues of merely $24 million. In December of 2010, the Philippines overtook India as the call center capital of the world, and now employs over 350,000 employees in the local call center industry, compared to India's 330,000, this according to data from the Call Center Association of the Philippines, and recently, the Philippine BPO generated US$11 billion in revenues. Projections from industry analysts and market experts states that the Philippines is still # 1 in the world for voice and #2 location across geographies after India.

India-based call centers and BPOs are also expanding operations to the Philippines, including big name companies like Compvue, iOPEX, OmniGlobe, and TCS. Wipro Technologies, an outsourcing company headquartered in Bangalore, India, has already set-up a center in the Philippines, and now employs close to 2,000 employees.

The recent growth spurt in the outsourcing industry in the Philippines has been fueled not by traditional low-value-added call centers but by the higher-end outsourcing or knowledge process outsourcing (KPO), including legal services, accounting, business analysis, Web design, medical transcription, software development, animation, and shared services. Through call centers still comprise the largest part of the BPO sector, the Philippines has begun leveraging its creative design talent pool, vast amount of lawyers, and its CPAs or general accountants. The demand for IT-BPO and GIC industry can expand to $25 billion in annual revenues and the services is expected to more than double by 2016 to approximately US$ 270 billion. If this is achieved, the industry will need to employ more than 1.3 million direct employees, thus contributing almost 10 % of GDP, making this industry the second-largest source of foreign exchange for the Philippines.

Industry experts are seeing a shift from cost-effectiveness to skills quality and competence. This development continues to strengthen the Philippines' position as an emerging global leader in the BPO and KPO industries.

To achieve and sustain this rapid growth, the Philippine government is offering significant fiscal and non-fiscal incentives to attract direct foreign investment in the outsourcing industry as part of the 2006 Investment Priorities Plan. The IPP was prepared by the Board of Investments (BOI) of the Philippines, the government agency responsible for promoting investments in the country, and is focused on the sectors identified in the Medium-Term Philippine Development Plan (MTPDP) 2004-2010 (PBOI 2006). Another government agency in the Philippines that offers tax breaks and incentives is PEZA.

Many BPO facilities are located in the following areas:

• Makati
• Manila
• Ortigas
• Fort Bonifacio
• Eastwood
• Cebu City
• Baguio City
• Cagayan de Oro
• Clark
• Dagupan City
• Davao City
• Dumaguete City
• Santa Rosa
• Iloilo City
• Legazpi City

Most Common Offshore Outsourcing in the Philippines

• Contact or Call Centers Outsourcing
• Software Development Outsourcing
• Web and Graphic Design Outsourcing
• Animation Outsourcing
• Game Development Outsourcing
• Online Marketing - SEO & SEM Outsourcing
• Engineering Design & Achitecture Outsourcing
• Medical Transcription Outsourcing
• Legal Transcription Outsourcing
• Finance & Accounting Outsourcing
• HR Administration Outsourcing

Philippines Outsourcing Workforce

Contact Kittelson & Carpo Consulting